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Gearing up for open skies policy onslaught

Publication Date : 23-11-2012

 

Asean will implement the open skies policy in 2015 and that means travellers will have more choices when flying across the 10 nations of the grouping.

AirAsia, AirAsia X, Malaysia Airlines (MAS), Firefly and Malindo Air will be around at that time, but joining them will be all the other Asean carriers which are fighting for the same passengers.

The players that can offer reasonable air fares, better quality of services and more frequencies will be the choices for the travellers that are price-conscious.

Many of the airlines are already taking steps to cut cost and upgrade their products so that they will win big in the race.

AirAsia announced yesterday that it would order 100 more aircraft to prepare itself for the onslaught of open skies and MAS is working out strategies to stay relevant in a tough environment.

Malindo is hiring pilots and crew to start services so that by 2015 it would have a sizeable market. And in Thailand, U Airlines, that took off in September, has joined the fray.

The whole idea of a single aviation market in Asean started nearly 20 years ago. It simply means governments across Asean are relaxing control on air transport.

It has not been an easy journey to get all the governments to agree given the disparities and considerations, but if Asean is to move as a single block, the opening up of the air sector to competition is a key step forward.

There has been progress.

In 2008, Malaysia and Singapore ended the duopoly by MAS and Singapore Airlines on the much protected KL-Singapore route. Last year the capital cities skies were open to competition.

Now the last bastion a fully liberalised environment in Asean for air travel.

The net effect - better air links and more frequencies.

But how do we strategise so that our neighbouring countries don't take more than what they should? The licence given to Malindo to operate will give the local market more choices.

For MAS, joining the oneworld alliance is also a move that allows it to fill its aircraft with passengers from other airlines.

The spill-over benefits will be a plenty, it is up to those in the travel trade to act now.

If they do not, then other players from neighbouring countries will set up shop here to take advantage of that.

It is not just the airlines and airports benefiting from open skies, but the liberalisation will open new opportunities besides creating jobs and all this will have a positive impact on our economy.

Total trade volume of Asean was US$204 billion last year and 25.4 per cent was between member states, according to the Asean Trade Statistics. The figure can go up given the opportunities of the open skies policies and the growing affluence across the Asean markets.

Malaysia is also the perfect link between Europe, the Middle East and Oceanic given its geographically strategic location.

Some of the world's 50 busiest routes based on seats are the Singapore-Jakarta, Singapore-Kuala Lumpur and Singapore-Bangkok flights.

The Kota Kinabalu route is poised to benefit from the liberalisation. It has not been fully-exploited and the air links to China agreement that will be signed by month end, will open 28 new routes in China.

Imagine the number of Chinese tourists going to Kota Kinabalu and vice versa.

Similarly, other routes in Asean will be open to the 600 million population of the grouping.

That is why the Government is expecting 36 million tourists by 2020 and 168 billion ringgit ($54.9 billion) in tourist receipts.

Ultimately, airlines will need to be more productive, focused in targeting markets when the skies are open to competition.

Competition will put pressure on airlines to lower costs, and to pass the cost savings to the passengers.

Low cost carriers will likely become more prominent in a liberalised environment but there will always be a market for the premium airlines as some people who still prefer to travel in style and comfort.

Airports can offer incentives to make Kuala Lumpur International Airport more marketable.

To tap all that growth that can be expected from the open skies policy, it is time to make the changes now and not later.

B.K. Sidhu is deputy news editor, The Star.

 

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